A frustrated worker at a computer
Credit: Maskot/Getty Images Plus
A frustrated worker at a computer
Photo credit: Maskot/Getty Images Plus

Can a nursing home end an emergency bonus program for unionized workers without negotiating after a contract has expired?

That’s the question before a federal appeals court as it considers a now-closed New Jersey facility’s request to overturn a National Labor Relations Board decision.

The case involves a tactic used by many providers during the pandemic: bonus pay for employees who continued to report to work during such uncertain times.

Attorneys for Alaris Health at Boulevard East last week told the US Court of Appeals for the Third Circuit that it had the right to end its bonus program under a previous collective bargaining agreement. A late 2022 NLRB panel ruling found the opposite and would force Alaris’ owners to pay more than five dozen former employees a combined $369,000, plus interest, for what the NLRB called “unlawful unilateral changes” to its COVID-19 bonus program.

Alaris started the bonus program in April 2020, at a time when COVID was ravaging the New York metro area, among others. A staff memo promised all workers a 25% hourly rate bonus starting April 2 and continuing through “at least April 30” and was billed as a “special COVID-19 hourly rate bonus.” About a week later, the company expanded the program to grant all nursing and respiratory staff a COVID a bonus that doubled their hourly pay.

In both cases, the union consented to the bonus rates but asked Alaris to provide notice and an opportunity to negotiate before any further pay changes were made.

Alaris began reducing the increases in May 2020, with the last bonus payments to CNAs dwindling to $1.50 an hour by the time the facility closed that November.

The company — which still operates eight facilities in New Jersey, according to Care Compare — argued that it had the right to both implement the bonuses and end them without bargaining because that had been a condition of a previous collective bargaining agreement.

That agreement had expired, leaving the bonus rights intact as a “status quo,” the provider argued. Wage adjustments, however, would have had to have been negotiated under the previous contract.

An administrative law judge found that the bonuses were gifts, not wages, because they were limited in duration and “not tied to any employment-related factors,” like “performance, seniority, production, attendance or . . . the gross profits of the facility,” according to the NLRB.

But the NLRB ruled that it is “well-settled law” that wages, hours, and other terms and conditions of employment are mandatory subjects of bargaining.

In May, Alaris asked the Third Circuit to review that decision. The NLRB, days later, asked the court to enforce its prior ruling.

In pre-argument filings, Alaris argued that 1199 SEIU United Healthcare Workers East had “purposely and unambiguously bargained away any right it may otherwise have had … to require that Alaris engage in further bargaining regarding either: (1) the decision to grant employees a bonus; or (2) or the terms of such bonuses.” Its only requirement, Alaris argued, was to inform the union of bonuses before implementing them.

Alaris asked the court to overturn the repayment remedy decided by the NLRB, which in effect “created a new term and condition of employment by making a temporary bonus into a permanent wage increase.” The repayments were calculated per-employee for any hours worked after the bonuses were reduced or rescinded.

The Third Circuit appeared “skeptical” of the overall challenge, Bloomberg reported last week.

But the court could uphold the NLRB ruling and give Alaris a chance to contest the amounts owed using an alternative calculation.